Lease

A Lease is a contract in which, for a payment called rent, the one entitled to the possession of real property transfers those rights to another for a specific period of time.

 

When a lease is executed, the fee simple estate is divided into a Leased Fee Estate and a Leasehold Estate.  The lessor owns the leased fee estate and the lessee owns the leasehold estate.

 

Depending on the property and the market, a leased fee may be more or less valuable than a fee simple estate.

 

The present value of the leased fee estate can be estimated by adding the present value of the contract rent (leasehold estate) to the present value of the reversion (leased fee estate) at the end of the lease.

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